China C.Bank Keeps Medium-Term Policy Rate Unchanged For A Sixth Month

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China’s central bank stood pat on its medium-term policy rate for a sixth straight month; as expected, with investors believing that the bank intends to gradually normalize monetary policy after the easing made during COVID lockdowns.

The People’s Bank of China (PBOC) left the rate on 100 billion yuan ($14.8 billion); worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.85% from the previous operation.

The monthly LPR fixing, which now serves China’s benchmark lending rate. Meanwhile, the PBOC has reduced the volume of daily reverse repos since the start of this month; by making its biggest cash withdrawal from the financial system in three months last week.
The move raised market speculation that policymakers are gradually exiting crisis-mode monetary easing delivered during COVID lockdowns.

With the same amount of such MLF loans maturing, the operation resulted in a zero net cash injection into the banking system. The central bank also injected 3 billion yuan through seven-day reverse; while keeping borrowing cost unchanged at 2.1%, according to the statement.


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